Government urges families to boycott gas supplier

British Gas was bracing itself for a mass customer revolt against its third price rise in 12 months.

Millions could switch suppliers in protest at bills which will have risen 50 per cent in a year and almost doubled in three years.

Even the Government urged the company's

16.5million account-holders to shop around.

In an extraordinary swipe at a private company, the Department of Trade and Industry said householders should consider switching to get a better deal.

The 12 per cent rise, from September, will force the average annual gas bill for a customer with the company up to over £700, £160 more than some major rivals.

British Gas has lost more than two million customers since prices first took a sharp upturn three years ago. Many more stayed loyal, possibly assuming other companies would only follow suit.

But experts believe the latest rise will be the final straw for millions. It was only in February that the last increase, of 22 per cent, was imposed.

Coupled with higher water bills, council tax and petrol prices, utility bills are tipping many household budgets into the red.

Even more pain is threatened with suggestions the Bank of England is preparing to raise interest rates, bringing higher mortgage bills.

Yesterday's announcement means gas bills for

10.7million households will rise by 12.4 per cent,

while electricity bills for 5.8million homes will go up by 9.4 per cent. The new average annual gas bill of £707 is up by around 50 per cent in a year, and 91 per cent since 2003.

For electricity, the average annual bill will be £428, up 81 per cent since 2003.

The increases are a savage blow, particularly to pensioners and poorer households, where utility bills account for a huge slice of spending. There is concern that thousands will be faced with a choice between heating and eating this winter.

Help the Aged spokesman Steve Jones said: 'When these new bills are combined with spiralling costs of water rates and council tax, many of the poorest older people are faced with less and less to spend on basics such as food and clothing. They must be prioritised

with help to insulate their homes or to have more efficient heating systems installed.'

British Gas's parent company, Centrica, insisted that it has been forced to put up prices to reflect higher wholesale prices, currently running around 70 per cent ahead of last year.

But this does not explain why bills are so much more expensive than those of its major rivals. Critics say it suggests either profiteering or serious inefficiency.

British Gas made a loss of £143million over the first six months of the year.

Its parent company Centrica recorded profits of £569million, down from £894million in the same period last year.

The price rises will increase British Gas income by a staggering £884million a year.

A customer exodus, of course, could put a huge dent in that budget. Consumer groups and even the Department of Trade and Industry lined up last night to encourage it.

'The Government understands the difficulties that this rise will cause to households and businesses,' said a DTI spokesman. 'People should consider switching suppliers, especially if you have never switched before.'

Adam Scorer, of Energywatch, said: 'British Gas is again the most expensive supplier. We advise consumers, especially those who have not switched before, to find out whether they can save money by changing to another company,'

Power supplies are dominated by six providers - British Gas, Powergen, npower, Scottish Power, EDF and Scottish & Southern.

Five of these have put up prices twice this year. Powergen, which has had one increase, is expected to announce another within months.

Around 50 per cent of all UK households have never switched their supplier. Many of these are old folk, who find the switching process confusing and frightening.

But over the last few years a new industry has sprung up of firms making money by switching consumers between utility firms and taking a commission.

Paul Schofield, of the price comparison website moneysupermarket.com, warned of a consumer backlash against British Gas, which has lost 400,000 accounts this year alone.

'These latest hikes could mean a further exodus from the energy provider,'

he said. The switching company Uswitch.com accused British Gas of effectively reneging on a promise to limit price rises.

After its February rise, executives said there could be 'no guarantees' but said they saw 'no need for any further price rises this year'.

Uswitch's Ann Robinson said: 'The public assurances given earlier in the year by British Gas following their record price rises in February have been rendered meaningless.

'Whilst British Gas continues to hide behind rising wholesale gas prices, this still doesn't explain why they remain so much more expensive than the other major suppliers.'

Oil and gas prices are rising sharply as a result of the instability in the Middle East, while the UK's own supplies of gas from the North Sea are running down.

The country will be heavily reliant on gas imports next winter, while there are fears that European power monopolies will not supply Britain with all the gas it needs.